I am puzzled by your statement that less then 8 percent of total pharmaceutical sales is reinvested…
Henk Jan Out
1

I did publish a link to fairly detailed information on R&D outlays, by PhRMA members and non-members, for several years. We can both agree that industry reinvestment rates are less than 100 percent, and that when prices go up $1, R&D outlays go up quite a bit less than $1. The fact that less than 8 percent of global revenue has been reinvested in R&D is a fact, and I think a significant one, because the entire size of the market, including the high prices of many generic markets, is driven by the initial period of the monopoly. What you should be asking is, what would prices be if there was no monopoly, at all? And, given the higher prices, what do we get back in terms of R&D, and in particular, useful R&D? For HIV drugs, we now know that prices for FDA approved generic drugs can be obtained for less than 1 percent of the average wholesale prices in the United States, for new HIV drugs. Those type of mark-ups are the price we pay for a fairly small amount of private sector R&D for HIV products. You can also look at the US Orphan Drug tax credit data to more fully appreciate how small are private sector investments in gaining FDA approval for new orphan indications, but the prices of the drugs are not small at all. At what point to people begin to ask the right questions, what is this costing us, and what do we get back, and more importantly, is there better way to finance R&D, than to have this small trickle down effect from high prices.

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